Last Updated on September 7, 2025
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Learn the Rules of Tax Lien and Deed Investing
Investing in tax liens and tax deeds is a way to buy property cheaply and earn money from unpaid taxes. Many beginners jump into auctions without reading the rules. When you do not know the rules, you could lose a lot of money or even give up on your dream of investing in property. This article explains the key lessons from my video and blog post, including simple stories, useful tips and clear reasons to learn the rules. It covers Tax Lien and Deed Rules and why they matter.
What Are Tax Lien and Deed Rules?
Tax Lien and Deed Rules are the laws and guidelines that tell you how tax lien certificates and tax deeds are sold, how bids are handled and when the property owner can reclaim the property. Each state, and often each county, has its own rules. Knowing these rules helps you avoid mistakes, plan your bids and understand what happens after the auction.
Why You Must Learn the Rules
People often think that all tax lien and tax deed sales work the same way. In reality, every state, and sometimes each county in a state, has its own deadlines, bidding methods and redemption periods. Ignoring these details causes problems. I have heard many stories about investors who did not take the time to learn the rules and lost a lot of money. Learning the rules before you bid helps you:
- Avoid expensive mistakes – Missing important details such as deadlines or local codes can lead to fines, extra liens, or even losing your property.
- Make more money – Knowing local rules allows you to prepare better and find chances other bidders miss.
- Feel confident – When you know how the process works, you can make smart decisions at the auction and talk with county officials without fear.
A Real‑Life Lesson
I bought a property at a tax sale in New York, but did not read the rules well. I later found out I had only 30 days to fix code violations; by the time I learned this, I had more liens and had to go to court. This experience taught me that reading and understanding the rules is absolutely necessary.
This lesson applies everywhere in the United States. Each area has its own rules for notice, redemption and how to bid. A simple mistake, like forgetting to record a deed on time, can erase your profit. By learning the rules ahead of time, you avoid surprises and make the investment process smoother.
Preparation Is Key
Learning about tax liens or deeds is not something you do once; it is a habit you keep. I share three tips for investors:
- Read the rules carefully – Go through the rules slowly and be sure you understand every part. Many counties put their auction rules online. If something is unclear, ask questions before the sale.
- Ask for clarification – Call the county tax office to confirm anything that confuses you. Officials usually appreciate investors who prepare well.
- Stay consistent – Make learning part of your daily routine. The more time you spend learning, the faster you will become an expert.
Besides these habits, attend practice auctions, study past auction results and talk to experienced investors. State laws are public, and some counties offer online guides. Keeping a personal “rule book” for each place you invest helps you avoid mistakes and find good deals.
How to Research Local Rules
Learning auction rules can seem hard, but you can break it into simple steps:
- Choose a state and a county. Decide where you want to invest based on your budget, how far you can travel and your comfort with risk. Some states sell tax lien certificates, others sell tax deeds, and a few have a mix of both.
- Visit county websites. Search online for “tax lien auction” or “tax deed sale” along with the county name. Many tax offices provide bid packets and answers to common questions.
- Download and read the bidder packet. Look for deadlines, redemption periods, payment types, minimum bids and rules for cancelling a sale. Highlight important dates and any parts you do not understand.
- Contact the tax office. Call or email the tax collector to explain unclear rules. Write down who you spoke with and their answers.
- Check the law. States often write tax lien and deed rules in their laws. Look up the sections mentioned in the bidder packet.
- Keep good notes. Make a spreadsheet with each county you research, listing key dates (like registration deadlines, auction dates and redemption periods) and any special requirements, such as deposits or early registration. This helps you compare different markets and avoid mistakes.
Consequences of Not Learning vs Learning the Rules
| Outcome | Not learning the rules | Learning the rules |
| Mistakes & penalties | High chance of missing deadlines, breaking local codes or losing the property | Avoid mistakes by knowing deadlines and requirements |
| Profit potential | Lower profits because of unexpected fees or legal costs | Bigger profits by planning for fees, redemption periods and resale strategies |
| Confidence | Feel nervous at auctions and might stop investing | Feel confident in bidding and owning properties because you understand the process |
| Long‑term success | Inconsistent results and possible burnout | Steady growth through systematic research and learning |
This table shows my message that knowledge builds momentum. When you learn the rules, you move from reacting to problems to following a clear plan.
A Simple How‑To: Preparing for Your First Tax Lien or Deed Auction
- Set your goals.
Decide if you want steady interest income from tax liens or direct ownership from tax deeds. Know your budget and how much risk you can take.
- Register early.
Many counties make you register and pay a deposit ahead of time. Registration periods can close weeks before the auction, so do not wait.
- Attend a workshop or webinar.
Local real‑estate groups and county offices often offer training. These events help you understand how bidding works and what legal rules apply.
- Do property research.
Visit properties in person or look at them online. Check for environmental issues, structural damage and whether someone is living there. Even if you are buying a lien, you could end up owning the property if the owner does not pay.
- Review the rules the day before.
Read the bidder packet again to make sure you know how bidding steps work, how to pay and what happens after you win. If you still have questions, call the tax office.
- Bid wisely.
Stick to your budget. Do not get carried away in bidding wars. In lien states, paying too much reduces your return because the interest rate is fixed.
- Complete your purchase.
Pay the remaining balance right away, record the lien or deed with the county, and keep track of redemption deadlines. If you buy a deed, plan repairs or a sale. If you buy a lien, watch how interest grows and be ready to foreclose if necessary.
FAQ
A tax lien lets you collect interest on unpaid property taxes. The owner can pay the lien and keep the property. A tax deed sale transfers full ownership of the property at auction with no redemption period in most states.
Check the county tax office’s website for a bidder’s packet containing important dates and rules. If you have questions, call the office or attend a seminar.
Every investment has some risk, but tax liens are generally safer than deeds. Research each property, know the redemption rules and spread out your investments to lower risk.
A lawyer or mentor isn’t required, but both can be helpful. Many investors start with county resources, webinars and books. Mentors can share experience and speed up learning.
Each state and county sets its own rules for tax sales, including whether they sell liens or deeds and how long redemption periods last. That is why it is important to learn the rules where you want to invest.
Final Thoughts
Real estate investing can lead to financial freedom. Some investors earn more than people with high‑paying jobs. As I say, the key to success is preparation, persistence and learning from mistakes. The more you learn, the faster you move from beginner to expert. Every county has its own rules, and those rules can change. Keep learning, it is not something you do only once.
Investing in tax liens and deeds is not a quick way to get rich. It takes patience, discipline and careful attention to detail. If you commit to learning the rules and using them all the time, you can build momentum and reach your property goals.
By following these guidelines and making continuous learning a habit, you can confidently navigate the world of tax lien and tax deed investing.
– Dustin
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